The TCJA changes for unreimbursed employee expenses

One of the most profound changes in the new tax law is that taxpayers who are used to taking a deduction for unreimbursed employee expenses subject to the 2% of AGI floor will loose those deductions effective from 2018 through 2025. Unreimbursed employee expenses are schedule A deductions. These changes to the tax laws do not affect sole proprietors who report their business activities on schedule C.

These are the expenses that you may incur during your W-2 job that are not reimbursed by your employer. Common deductions may include mileage for a salesperson, tools for a mechanic, uniforms, professional licenses, union or other professional dues, home office, home computer, travel expenses, or meal and entertainment expenses to name a few.

The largest impact in the clients I work with is going to be for salespeople because they can drive between 40,000 and in some cases as many as 70,000 miles each year. They are also required to entertain. Those are a lot of expense deductions that they are loosing. If you think 70,000 business miles is a lot, that is the same as driving from Naples, FL to Miami and back, five times a week, for one year. There are plenty of employees who make drives like that and more, and for them, and anyone else who relies on these deductions, the TCJA is going to hurt.

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